CIPS 80:20 Vision, and we’re not thrilled by a procurement “licence to practice”

We’re gearing up for a big autumn push on fundamental questions – such as “where is procurement going”? We’ve hinted at this recently in a few posts, both positive (covering interesting technology from the likes of Trade Extensions and SAP) and less positive (the increasing criticism of procurement from various quarters).

So we were pleased to see CIPS getting into the mood with the publication over the summer of “80 : 20 Vision” to celebrate the 80th anniversary of the Institute. It is a little bit vague as to how it was developed and just who was involved – the name checks go to Steve Morgan (who ran procurement at Sellafield and BAA), Professor Michael Lewis, and the writers Nick Martindale and Gerard Chick. But I believe other CPOs had some input into it.

Five key themes are discussed in the Paper – in summary, and from the document’s executive summary

An evolution in professional procurement, where spend management shrinks and organisations move away from large, discrete, enterprise-level organisations dedicated to doing their procurement.

The emergence of a new supply management, in which many of the current procurement and sourcing activities (the ones that do not get redistributed to internal end-users), will be outsourced over the next decades.

Global businesses will enter a new era of decision-making – instantaneous business intelligence is not far away.

Collaboration will be the new ‘normal’. The coming decades will see a major emphasis on taking innovation from the supply base. We may well be witnessing the dawn of the extended enterprise – this trend promises exciting times for supply professionals.

Risk management will become everybody’s business as capacity and demand soar. Complexity will dominate our thinking –as emerging economies get fast-growing, successful and culturally different companies on the global playing field, the process of selecting suppliers will carry more risk, more complexity, and become more fluid.

We’ll come back and look at these is more detail another day – they’re worth more debate. But one oddity is the Foreword from David Noble, the Chief Executive of CIPS. It is odd because it just does not fit with the rest of the content. The body of the report paints a pretty radical view of procurement’s future. As you can see just from those headlines, there is talk of a smaller function, outsourcing, more integration with the business, budget holders executing much of what we currently see as the procurement task. I wouldn’t argue with the general direction.

But then we have Noble, talking about his idea of a “licence to practice”.

Whatever the terminology, it is my strong belief that this profession must be licensed. Evidence shows that other professions have gained in stature and influence through regulation and licence and in order for this profession to achieve the recognition it deserves there must be a ‘licence to practice’ that is recognised by all sectors and across the globe.

Not only is this way out of line with the general thrust of the document, it raises all sorts of questions. What elements of the procurement process would it be that would require the licence? Is it supplier selection? Is it all negotiations with suppliers? Is it signing the contract? What sanctions will be taken against an individual – or an organisation – that carries out unlicensed buying? Who regulates this?

The rest of the 80/20 vision sensibly suggests that organisations should develop wider commercial competence, not just restricted to people designated as “procurement”. So why would Apple, Google, Mars, or other forward thinking firms, agree to externally defined limitations on who in their firms can “buy stuff”? I'm afraid I just cannot see it happening, and if CIPS is going to promote a forward-looking vision of the profession, a licence to practice just doesn’t fit.

The only place it could work perhaps is in public sector procurement, and in particular countries that have a big problem with corruption. It might provide some protection against that – although there’s nothing to say that every CIPS licence holder will be a paragon of virtue.

I do understand where Noble is coming from – I think he has good intentions, although there is a bit of control-freakery inherent in the idea, and he genuinely thinks it would help organisations and of course would be very good news for CIPS itself.

But does the CIPS Board support the concept? Because there is a danger that it makes CIPS look out of touch and self-serving. I’ve mentioned the idea to a few private sector CPOs, and their reaction (honestly) is usually to look puzzled, then laugh.

If the Board do support it, then they’re rejecting the 80:20 Vision, and they’re leading CIPS to an ever stronger focus on the public sector in Africa, Asia and the Middle East, where the Institute may succeed in developing these “closed community” ideas. It won’t, I fear, work anywhere else.

Voices (3)

A quick test I use for looking at procurement is to contemplate using the same approach on sales or marketing.
1. Move away from central sales – quite feasible, but how do you ensure quality and consistency
2. Outsource sales – well maybe use distributors, but many companies would find that intellectually very challenging
3. Instaneous decision making? Well data is instantly available, but intelligence requires some processing of that data
4. Collaboration – maybe. But what if one party has an opportunity to make more money by playing fast and loose
5. Risk is everyone’s business? Not in sales it isn’t. It’s someone elses problem after I’ve hit my bonus.
CIPS License? Fine for law and accounting, but I think people would have a problem with doing that for sales.

So I think the direction is interesting and possbily right, but I think the timescale is very optimistic. I think it all assumes that procurement is better embeded in business and management than I think it is currently.
My two penny worth.

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